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There
is at least one good reason for requiring the
teaching of Virginia
history. It
might allow Virginians to learn from the painful
lessons of the past instead of experiencing the same
pain over and over again.
Our
elected officials should be the first to study state
history. They
might not be as quick to go off blindly in pursuit
of new programs without understanding the risks
involved. As
a matter of fact, they might come to realize that
many of these “new” programs aren’t really new
at all.
Take
the area of transportation as an example.
Whitt Clement, the Secretary of
Transportation, recently touted the Warner
Administration’s 2005 transportation
public-private partnership initiative as an
innovative approach.
He insists that the proposed approach has
never been tried before.
Clement
ignores at least a century of Virginia
history in making that erroneous claim.
Virginia’s
early “public-private” approach to building
works of internal improvement, including canals,
railroads and roads, had a profound impact on state
history.
The
Commonwealth initially allowed private investors,
most notably George Washington, to risk their own
money on works of internal improvement.
In the 1780s, Washington and others formed
the James River Company (later becoming the
James
River
and Kanawha Canal Company) and the Dismal Swamp
Company to construct canals to stimulate economic
development. There
also would be an Appomattox Company and a
Rappahannock Company for a similar purpose.
Roads often were built by private investors,
who charged tolls to finance the projects or
justified the investment on the promise of greatly
increased economic activity generated by new roads.
In
most other states, taxpayer funding for internal
improvements soon displaced private investment.
Virginia,
more than any other state, resisted financing works
of internal improvement exclusively with public
funding in favor of a system of “mixed
enterprise.”
This public-private approach was a compromise
between the two traditional approaches — one
entirely public, the other entirely private.
Public funding was necessary at that time
because the means were not readily available to
raise private capital in the huge sums required for
these projects.
Under
Virginia’s
“mixed enterprise” system, a Board of Public
Works controlled a single fund for virtually all
works of internal improvement.
This program was justified as a way to create
incentive for private investment, but private risk
was displaced by a pledge of the Commonwealth’s
credit as security for the debt used to finance most
of the projects.
The
discipline of the marketplace gave way over time to
constant political pressures to expand the program
of internal improvements.
Taxpayers ultimately were left holding the
bag.
The
reaction to this profligacy was a movement to add
provisions to the Virginia Constitution barring the
Commonwealth from constructing or investing in works
of internal improvement and from lending its credit
to private companies.
Almost immediately after those constitutional
restrictions were approved, legislators, judges and
crafty investment lawyers and bankers began to
develop techniques to circumvent them.
Suffering
from collective amnesia or denial, our elected
officials are once again ignoring these
constitutional restrictions and the history that
prompted them as they rush to finance more works of
internal improvement.
The old “mixed enterprise” approach has
been recycled as a “public-private partnership”
initiative, forgetting that in such a mix public
financial risk inevitably displaces private risk.
Don’t
hold your breath until our leaders take stock of
history. Just
tuck this warning away and pull it out in a few
years.
--
February 14,
2005
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